National Association of Home Builders Discusses Economics and Housing Policy

Home Price Growth Slows

National home price appreciation rose at a slower pace in April as more than half of metro areas experienced a deceleration in price growth. However, since 2014, deceleration in price growth nationwide has been followed by a re-acceleration. Nevertheless, three metro areas, New York, San Francisco, and Washington D.C., typically considered higher house price areas, recorded outright declines in house prices. Across the New York City metro area, house prices have fallen for the second consecutive month.

The Case-Shiller U.S. National Home Price Index rose at a seasonally adjusted annual growth rate of 4.1% in April, according to the data released by S&P Dow Jones Indices, slower than the pace of growth in March, 4.8%. In April, home prices were 9.1% above their pre-recession peak level, reached in February 2007. Continued house price appreciation reflects continued economic growth and tight inventory.

The purchase-only House Price Index from the Federal Housing Finance Agency (FHFA) rose at a seasonally adjusted annual rate of 1.8% in April, down from the 2.3% increase in March, confirming the deceleration in home prices. However, a pattern of price growth slowdown, when measured by the Case-Shiller U.S. National Home Price Index, followed by a re-acceleration has prevailed since 2014.

In addition to tracking home price changes nationwide, S&P also estimated home price indexes across 20 metro areas. The bars in Figure 2 show the 20 major U.S. metropolitan areas’ annual growth rates in April 2018 and in March 2018. The red line presents the national growth rates in April 2018; the green line presents the national growth rates in April 2018.

In April, the annual growth rates of the 20 metro areas ranged from -3.9% to 17.3%. Among the 20 metro areas, Detroit led the way with a 17.3% increase, followed by Seattle with a 14.4% increase and Las Vegas with 14.0% like last month. Compared to 15 metro areas in March, 8 of the 20 metro areas exceeded the national average of 4.1% in April. Washington DC (-0.9%), San Francisco (-3.3%) and New York (-3.9%) experienced price declines in April. Reports indicate that these three areas have higher house prices. However, Los Angeles was also considered a high price area, but price growth accelerated in April.